The pathogenesis of fibrotic lung disease involves damage or injury to type 2 cells (AT2) in the alveolus which compromises their ability to differentiate properly into type 1 (AT1) cells, leading to faulty epithelial repair, irreversible damage, loss of function, and fibrosis. Mechanisms that normally control the process of differentiation of AT2 cells into AT1s are not understood, so potential regulatory molecules or pathways that may be affected by these pathogenic stimuli have not been elucidated. We propose that the key to alveolar cell differentiation is the relative sulfation of the extracellular matrix (ECM) microenvironment underlying alveolar cell types. This in turn controls activation of the wingless (Wnt) signaling pathways and the forkhead (Fox) family of transcription factors. Activation of these signaling molecules regulates cell differentiation and phenotype in the alveolus. In this proposal, we will show that following proliferative events associated with reepithelialization in the alveolus, there is a critical, dynamic balance between alveolar epithelial cells and their ECM microenvironment. This is significantly modulated by both fixed and soluble sulfated ECMs, whose downstream effect is to specifically modulate WNT signaling and enhance FOXA1 expression. These factors and pathways then regulate specific events that both maintain AT2 cell number and phenotype, and effectively drive cell differentiation to AT1s. The hypothesis to be addressed is: Following DNA synthesis and cytokinesis, exposure of the daughter AT2 cell to high levels of sulfated ECMs triggers sequential expression of forkhead transcription factors (Foxa2 > Foxa1 > Foxp2) and increases Wnt7a expression and signaling which together drive differentiation of AT1 cells. To address this hypothesis, we will culture isolated human or rodent AT2 cells, alone as well as in co-culture with lung fibroblasts, central regulators of the AT2 cell microenvironment. AT2 cells (human or rat), or cells from genetically modified mice will be treated with specific enhancers or inhibitors of Wnt production, FOX gene and protein regulation, and SECM composition. These results will be compared with examination of targeted molecules by protein and/or gene expression methods in a whole animal model of pulmonary fibrosis. Results of these studies are expected to provide essential information needed to better understand basic cell-cell and cell-ECM relationships in alveolar epithelial homeostasis as well as the mechanisms that steer the pathogenesis of fibrogenic change in the lung as a consequence of alveolar injury and/or disease.